Jamie Spencer
Market Overview
U.S. stocks fell on Wednesday as Wall Street navigated uncertainty stemming from conflicting labor market data and reports that President-elect Donald Trump is considering declaring a national economic emergency.
At 9:52 a.m. ET:
- Dow Jones Industrial Average: Down 117.37 points (-0.28%) to 42,410.99.
- S&P 500: Dropped 6.27 points (-0.11%) to 5,902.76.
- Nasdaq Composite: Declined 9.11 points (-0.05%) to 19,480.57.
- Russell 2000 Index: Fell 1.5%, reflecting pressure on domestically focused small-cap companies.
Labor Market Data Fuels Uncertainty
Investors were torn between two labor reports:
- ADP National Employment Report: Showed a sharp slowdown in private payroll growth for December.
- Labor Department Report: Revealed a decline in weekly jobless claims, suggesting a robust labor market.
Sam Stovall, Chief Investment Strategist at CFRA, commented, “It seems as if one report is contradicting the other. Investors are trying to determine the implications for Friday’s payroll numbers.”
Sector and Stock Performance
- Megacap Tech: Nvidia rose 1.8%, Alphabet remained flat, and Meta declined 0.7%.
- Utilities: Led sector losses with a 1% decline, weighed down by rising Treasury yields.
Quantum-computing stocks saw significant losses following Nvidia CEO Jensen Huang’s comment that computers based on this technology are still 30 years away:
- Rigetti Computing: Down 41.5%.
- IonQ: Dropped 36.5%.
- Quantum Computing: Declined 40.6%.
Advanced Micro Devices (AMD) fell 3.8% after HSBC downgraded the stock from “buy” to “reduce.”
Inflation and Interest Rate Outlook
A healthy labor market continues to support the Federal Reserve’s current interest rate stance, with traders anticipating the first rate cuts of 2025 in May or June. Fed Governor Christopher Waller noted that while inflation should decline further, the pace of interest rate reductions remains uncertain.
Minutes from the Fed’s December meeting are expected at 2:00 p.m. ET and could provide additional insights.
Trump’s Trade Policies Add to Market Tensions
Market sentiment was further strained by a CNN report suggesting Trump might invoke the International Economic Emergency Powers Act to build a new tariff program targeting U.S. trade partners. Concerns about potential global trade wars and inflationary pressures have kept investors on edge ahead of Trump’s inauguration later this month.
Market Breadth and Trading Volume
- Declining issues outnumbered advancers by a ratio of 3.88-to-1 on the NYSE and 4.22-to-1 on the Nasdaq.
- The S&P 500 recorded 4 new 52-week highs and 24 new lows, while the Nasdaq posted 20 new highs and 78 new lows.
Markets will be closed Thursday for a national day of mourning in honor of former President Jimmy Carter.
